Some people who walk away from their homes in lieu of foreclosure may face costly, and legel, ramifications that may haunt them for years.
The underlying realities of the real estate market may be a lot deeper than most of us care to understand. We know the housing market is in serious trouble, but unless you are one of the millions of homeowners who are still teetering on the brink of foreclosure, you can't possibly know the anguish that goes along with losing your home.
You don't have to be a genius to grasp the depth of the crisis. All you have to do is look at the numbers. There are literally hundreds of thousands of homes across the country that are vacant due to foreclosure and hundreds of thousands more that are in the process of being foreclosed on. And then there are the hundreds of thousands of people who are desperately trying to have their loans modified. The numbers are staggering and they are real.
Things are so unstable in the housing market right now that any one of many possible glitches in the economy could make things get much worse than they currently are, such as more layoffs, more business closures, and a continuing slowdown in the stock market and in the overall economy.
The truth is that many people are simply unable to qualify for a loan modification because of the lack of income or their negative credit status. And many others, even if their loans are modified, still can't make the payments. In essence, it's going to be a while before the true number of foreclosures become known because many who are modifying their mortgages are simply buying time.
So what does this mean? It means that there may come a time when some of those who were approved for a loan modification may end up in foreclosure again, and some who are not in foreclosure right now may find themselves in trouble with their home loans if the economy does not improve. People are getting laid off at an alarming rate and based on economic projections, it may be a while before the job market picks up. A lot of people who are losing their jobs are going to lose their homes, too, because they will no longer be able to make the mortgage payments.
It's not just the people who bought property over the last five or six years who are struggling with their house payments. Many people who have owned their homes for decades were told, by the so-called experts, that they should refinance their homes, take the money, and invest in the stock market. That sounded good at the time, but now, we see the folly in following blindly behind those who were leading the bandwagon.
Many of those novice investors who followed the advice of the so-called experts were elderly, retired, and many are near retirement age. They were not first time buyers or real estate speculators. They were average citizens who were persuaded to borrow money and take risks with the equity in their homes. Many lost big time in the stock market and now they are losing, or have already lost, their homes.
Over and over again you hear on the news that many people, frustrated with their inability to make their mortgage payments and seeing no way out of the mess they are in, are simply walking away from their homes. They feel helpless and hopeless. They are tired of struggling to keep their homes and many have given up. They are walking away from their homes in record numbers.
Walking away from your home may be what you have to do, but their are some things that you should know. Even if you make an agreement with your lender to give back a deed in lieu of foreclosure, until the deed is recorded granting your name off of the title to the property, you may still be held liable for the property.
Many people who walk away thinking that, other than the actual foreclosure being on their record, they were relieved of any future liabilities have found that this is not necessarily the case. There have been several instances in which the mortgage servicing company didn't complete the foreclosure process and the mortgagee's names were still listed on the property as the legal owners.
This has left them in more trouble than they thought because if the property is vandalized or damaged in any way, they may still have to bare the burden of any costs for repairs, tax liens, and other legal actions. In short, you may still be held liable. Any debt or other liabilities associated with the property after you have walked away may find it's way back to you.
Even if you agree with the lender to give the property back by deed in lieu of foreclosure, don't take for granted that the lender is going to look after your best interests. With so many properties going through foreclosure and loan modification processes right now, it's very easy for your paperwork to get lost in the shuffle or put on someone's desk and forgotten.
Talk with your lender on a regular basis until you are sure that your name is no longer on title to the property. Always get copies of everything you sign, including a copy of the deed, and don't leave anything to chance.